Connect with us
Finance Digest is a leading online platform for finance and business news, providing insights on banking, finance, technology, investing,trading, insurance, fintech, and more. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.


By Joseph White

(Reuters) -AutoNation Inc and other brick-and-mortar auto dealerships in the United States turned shortages of new and used vehicles to profitable advantage in the first quarter, but the No. 1 U.S. auto retailer’s shares were volatile Thursday as analysts questioned the outlook for consumer demand.

During a conference call Thursday, analysts pressed AutoNation Chief Executive Mike Manley on whether consumer demand for new vehicles is slowing, and why AutoNation’s used car profit margins declined during the first quarter.

AutoNation shares were flat in early trading, after initially rising by 4.6% to $110.70 in premarket trading, then falling by nearly 5%.

Rising interest rates, high gas prices and broader inflation in the U.S. economy are putting pressure on consumers. Manley told Reuters that demand for used and new vehicles remains strong.

“We haven’t seen any drop-off in our inquiry levels,” Manley said. “They are up year over year. The industry is at a level where there is more demand” than supply of vehicles.

Manley told analysts that while the annualized pace of U.S. auto sales has been running at recession levels, that is a reflection of the hits to production from supply chain snarls.

We have customers for everything that’s coming,” Manley said.

AutoNation reported adjusted diluted earnings per share of $5.78, beating estimates of $5.25 per share, according to Refinitiv IBES data. Robust demand for used vehicles and sharply higher profit margins on new vehicle sales lifted profits.

AutoNation and Lithia Motors, two of the largest U.S. auto dealership chains with hundreds of stores each, both outperformed investor expectations in the January to March period. Online used car retailer Carvana, however, on Wednesday reported a wider loss than analysts had forecast and its shares fell before the market open.

Lithia Chief Financial Officer Tina Miller also told Reuters “demand has continued to outpace supply” even as vehicle prices have risen, pushing average monthly payments to about $450 from the roughly $300 level before the pandemic.

Lithia on Wednesday reported it doubled its first quarter net income compared to a year earlier as revenue rose by 54%.

AutoNation said its average gross profit on new vehicles it sold more than doubled in the first quarter compared with a year earlier, rising to $6,112.

AutoNation’s sales of used vehicles rose by 47%, but average gross profit on used vehicles sales fell by 10%.

Manley said the company became concerned about pricing and sales trends for certain used vehicles during the quarter, and moved to clear out inventory. We started to use the data we had available to us. We corrected very aggressively in the quarter,” Manley said.

AutoNation, Lithia and other U.S. auto dealerships built on traditional showrooms are rapidly building the capability to sell and finance vehicles online, while expanding highly profitable repair operations that online dealers such as Carvana do not have. AutoNation reported 45.9% gross profit margins on parts and service during the first quarter. Revenue for service rose $1 billion, up 18% from last year.

AutoNation’s net income was $362.1 million, or $5.78 per share, for the quarter ended March 31, compared with $239.4 million, or $2.85 per share, a year earlier.

Revenue rose 14.4% to $6.75 billion, above estimates of $6.48 billion.

(Reporting by Ashwini Raj in Bengaluru and Joseph White; Editing by Amy Caren Daniel, Tomasz Janowski and Jonathan Oatis)

Continue Reading

Why pay for news and opinions when you can get them for free?

       Subscribe for free now!

By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Posts